Miceli v. Smith & Nephew, Inc.

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

WEST PALM BEACH DIVISION

CASE NO. 22-81396-CIV-CANNON/Reinhart

SANDRA MICELI,

Plaintiff,

v.

SMITH & NEPHEW, INC. et al.,

Defendants.

________________________________/

ORDER ACCEPTING MAGISTRATE JUDGE’S

REPORT AND RECOMMENDATION [ECF No. 27]

THIS CAUSE comes before the Court upon Plaintiff’s Motion to Remand (the “Motion”)

[ECF No. 22]. On November 28, 2022, Judge Bruce E. Reinhart issued a report recommending

that Plaintiff’s Motion be granted (the “Report”) [ECF No. 27]. Defendant Smith & Nephew, Inc.

filed Objections to the Report [ECF No. 28], to which Plaintiff responded [ECF No. 29]. The

Court has reviewed the Report [ECF No. 27], Defendant’s Objections [ECF No. 28], Plaintiff’s

Response [ECF No. 29], Defendant’s Reply [ECF No. 30],1 and the full record. For the reasons

set forth below, the Report [ECF No. 27] is ACCEPTED; Plaintiff’s Motion to Remand

[ECF No. 22] is GRANTED; and this matter is remanded to the Fifteenth Judicial Circuit in and

for Palm Beach County, Florida.

RELEVANT BACKGROUND

On August 10, 2022, Plaintiff filed a civil action in the Fifteenth Judicial Circuit in and for

Palm Beach County, Florida [ECF No. 1 p. 1]. On September 7, 2022, Plaintiff filed a six-count

1 Although Defendant was required to seek leave to file a Reply to Plaintiff’s Response, see Fed.

R. Civ. P. 72(b)(2) (permitting objections and responses to objections), the Court elects in this

instance to consider it.

First Amended Complaint against Defendants Smith & Nephew, Inc. (“S&N”), J.E. Scanlon

Surgical, LLC (“Scanlon Surgical”), John Scanlon, and Heather (Clay) Wright alleging the

following causes of action against all Defendants: (1) Strict Product Liability – Failure to Warn

(Count I); (2) Strict Product Liability – Defective Design (Count II); (3) Strict Liability –

Manufacturing Defect (Count III); (4) Strict Liability – Breach of Warranty (Count IV);

(5) Negligence (Count V); and (6) Negligent Misrepresentation (Count VI) [ECF No. 22-1]. These

claims arise from Plaintiff’s 2014 hip replacement surgery performed by orthopedic surgeon, Dr.

Holly Brown Lenard. Dr. Lenard implanted in Plaintiff an “Echelon stem” (manufactured by

S&N), which subsequently fractured [ECF No. 22-1]. Plaintiff alleges that Defendants Scanlon

Surgical, Scanlon, and Wright were responsible for knowingly marketing and selling the defective

Echelon stem to Plaintiff’s physicians and/or healthcare providers [ECF No. 22-1 ¶ 43].

Plaintiff is a resident of Florida [ECF No. 22-1 ¶ 22]. Defendant S&N is a Delaware

corporation [ECF No. 22-1 ¶ 24]. Defendant Scanlon Surgical is a Florida corporation with its

principal place of business in North Palm Beach, Florida [ECF No. 22-1 ¶ 29]. Defendants

Scanlon and Wright are Florida residents [ECF No. 1 ¶¶ 32, 38].

On September 8, 2022, S&N removed the action to this Court under 28 U.S.C. § 1441,

asserting diversity jurisdiction under 28 U.S.C. § 1332(a) [ECF No. 1 p. 4]. S&N concedes that

Defendants Scanlon Surgical, Scanlon, and Wright (the “Florida Defendants”) are citizens of

Florida but urges the Court to disregard their citizenship under the doctrine of fraudulent joinder

[ECF No. 1 p. 5].

On October 4, 2022, Plaintiff filed the instant Motion to Remand [ECF No. 22], which this

Court referred to Magistrate Judge Reinhart for a Report and Recommendation

[ECF Nos. 27 28, 29, 30]. The Report is ripe for adjudication.

LEGAL STANDARD

To challenge the findings and recommendations of a magistrate judge, a party must file

specific written objections identifying the portions of the proposed findings and recommendation

to which objection is made. See Fed. R. Civ. P. 72(b)(3); Heath v. Jones, 863 F.2d 815, 822

(11th Cir. 1989); Macort v. Prem, Inc., 208 F. App’x 781, 784 (11th Cir. 2006). A district court

reviews de novo those portions of the report to which objection is made and may accept, reject, or

modify in whole or in part, the findings or recommendations made by the magistrate judge.

28 U.S.C. § 636(b)(1). To the extent a party fails to object to parts of the magistrate judge’s report,

the Court may accept the recommendation so long as there is no clear error on the face of the

record. Macort, 208 F. App’x at 784. Legal conclusions are reviewed de novo, even in the absence

of an objection. See LeCroy v. McNeil, 397 F. App’x 554, 556 (11th Cir. 2010); Cooper-Houston

v. S. Ry. Co., 37 F.3d 603, 604 (11th Cir. 1994).

DISCUSSION

The Report recommends that the Court grant Plaintiff’s Motion to Remand because the

presence of the Florida Defendants defeats diversity jurisdiction [ECF No. 27 pp. 18–19]. In

reaching this conclusion, the Report first determines that the Amended Complaint, filed prior to

removal, became the operative pleading for purposes of considering diversity and the Notice of

Removal [ECF No. 27 pp. 9–10]. The Report then proceeds to consider whether Plaintiff

“fraudulently joined” the Florida Defendants to defeat diversity jurisdiction [ECF No. 27

pp. 10–18]. After evaluating the Amended Complaint and the declarations submitted by the

parties, the Report concludes that S&N has not met the “heavy burden” to establish fraudulent

joinder—i.e., S&N has not shown, by clear and convincing evidence, that there is “no possibility”

that Plaintiff can establish a cause of action against the Florida Defendants, at least with respect to

Count I (Strict Liability – Failure to Warn) and Count V (Negligence) [ECF No. 27 p. 18]. See

Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997) (describing the “heavy” burden to

establish fraudulent joinder and the need to evaluate all factual allegations and questions of law in

Plaintiff’s favor). As such, the Report determines, complete diversity is lacking, requiring remand

[ECF No. 27 p. 19].

I. Consideration of Amended Complaint to Determine Diversity Jurisdiction

S&N first objects to the Report’s conclusion that the Amended Complaint (not the initial

Complaint) is the operative pleading for purposes of determining diversity jurisdiction and the

propriety of removal [ECF No. 28 pp. 5–8].2 According to S&N, although Plaintiff named

Defendants S&N, Scanlon Surgical, John Scanlon, and Heather Wright in the Amended Complaint

prior to removal [ECF No. 22-1], the Amended Complaint should not be deemed the operative

pleading for removal purposes, because neither S&N nor the Scanlon Defendants had been

properly served with the Amended Complaint prior to removal [ECF No. 28 p. 1 (“Smith &

Nephew’s contention is that the original Complaint was operative because Plaintiff filed the

Amended Complaint in state court, but by Plaintiff’s own admission had not served it on Smith &

Nephew or the Scanlon Defendants at the time of removal.”); ECF No. 28 pp. 5–8 (explaining that,

although S&N and the Scanlon Defendants had received service of process of the original

complaint, they had not appeared in the state court case at the time Plaintiff filed the Amended

Complaint); ECF No. 28 pp. 7–8 (“The well-reasoned case law and sound policy support a ruling

that when defendants have been served with process in the form of an original complaint but have

not yet entered an appearance when an amended complaint is filed in state court, formal service of

2 The initial complaint named as Defendants S&N (Delaware corporation), Scanlon Surgical

(Florida corporation); and John Scanlon (Florida resident) [ECF No. 1-2 ¶¶ 24, 29, 32]. The

Amended Complaint retained the previous defendants and all previously asserted claims but added

Wright as another Florida defendant and added claims against all defendants for strict liability

(manufacturing defect) and strict liability (breach of warranty) [ECF No. 22-1].

the amended complaint is required before it becomes the operative complaint for removal

purposes.”)].3

S&N’s argument fails for the reasons stated in the Report and the additional authorities

cited herein [ECF No. 27 pp. 9–10]. “The determination of whether a resident defendant has been

fraudulently joined must be based upon the plaintiff’s pleadings at the time of removal,

supplemented by any affidavits and deposition transcripts submitted by the parties.” Pacheco de

Perez v. AT & T Co., 139 F.3d 1368, 1380 (11th Cir. 1998) (emphasis added). As numerous courts

have acknowledged, this evaluation includes consideration of all defendants named on the face of

the filed pleading—regardless of whether such named defendants have been served.4 At the time

of removal in this case, Plaintiff had filed the Amended Complaint in state court, requiring this

Court to examine the propriety of removal from the face of the Amended Complaint—not from

3 Although S&N does not disagree that it was aware of the Amended Complaint before it removed

this action, the parties in their objections to the Report dispute whether Plaintiff effectuated proper

e-mail service of the Amended Complaint under Florida Rule of Judicial Administration 2.516

[ECF No. 29 pp. 2–3; ECF No. 30]. The Court declines to decide this issue—accepting for

purposes of this Order Defendants’ contention that it was not properly served with the Amended

Complaint prior to removal.

4 See Pullman Co. v. Jenkins, 305 U.S. 534, 541 (1939) (“[T]he fact that the resident defendant

has not been served with process does not justify removal by the non-resident defendant.”); United

States ex rel. Gen. Rock & Sand Corp. v. Chuska Dev. Corp., 55 F.3d 1491, 1495 (10th Cir. 1995)

(“[D]iversity jurisdiction must be determined from the face of the pleading and not from returns

of service of process or lack thereof[.]” (original brackets and internal quotation marks omitted));

Howell v. Tribune Ent. Co., 106 F.3d 215, 217–18 (7th Cir. 1997) (rejecting argument that the

citizenship of a defendant could be ignored because the defendant had never been served);

Pecherski v. Gen. Motors Corp., 636 F.2d 1156, 1160–61 (8th Cir. 1981) (“[S]ection 1441(b) did

not change the removal requirement set forth in Pullman that a court, in determining the propriety

of removal based on diversity of citizenship, must consider all named defendants, regardless of

service.”); New York Life Ins. Co. v. Deshotel, 142 F.3d 873, 883 (5th Cir. 1998) (“Whenever

federal jurisdiction in a removal case depends upon complete diversity, the existence of diversity

is determined from the fact of citizenship of the parties named and not from the fact of service.”);

Hunter Douglas Inc. v. Sheet Metal Workers Intern. Ass’n, Local 159, 714 F.2d 342 (4th Cir. 1983)

(“Diversity jurisdiction is determined by the face of the complaint, not by which defendants have

been served.”); Rhodes v. Barnett, 692 F. App’x 834, 835-36 (9th Cir. 2017) (“[U]nserved parties

must be considered in determining whether there is complete diversity.”).

returns of service or lack thereof. See Pullman Co., 305 U.S. at 541 (“[T]he fact that the resident

defendant has not been served with process [of the Amended Complaint] does not justify removal

by the non-resident defendant.”). The Court agrees with the Report’s determination to evaluate

diversity jurisdiction—and S&N’s associated fraudulent joinder argument—based on the

Amended Complaint.

II. Fraudulent Joinder

S&N next takes issue with the Report’s conclusion that S&N has not met its burden to

establish fraudulent joinder [ECF No. 28 pp. 8–20]. The Report examines the record on removal,

including the declarations submitted by Dr. Lenard [ECF Nos. 22-5, 26-1], and concludes that

S&N has failed to show “no possibility” that Plaintiff can state a colorable claim for relief against

the Florida Defendants for strict product liability based on a duty to warn (at least as to Defendant

Wright), and against the Florida Defendants for negligence [ECF No. 27 pp. 16, 18]. S&N

criticizes the Report for failing to apply federal pleading standards in evaluating the Amended

Complaint; relying on what S&N describes as vague and unsupported allegations in Dr. Lenard’s

declarations (as compared to the more specific Scanlon and Wright Declarations

[ECF Nos. 25-1, 25-2, 25-3]); and making what it characterizes as improper assumptions and

inferences in evaluating Plaintiff’s claims against the Florida Defendants [ECF No. 28 pp. 8–20].

Upon full review of S&N’s objections, the Court agrees with the Report that remand is

warranted. S&N’s objections essentially reduce to an attack on the sufficiency of Plaintiff’s

allegations and the inferences to be drawn from the competing declarations in the removal record

[ECF Nos. 22-5, 26-1, 25-1, 25-2, 25-3]. While S&N ultimately may prevail on these points on

summary judgment or otherwise, S&N has not shown error in the Report’s application of the

fraudulent joinder doctrine, which of course is not a federal pleading standard but rather a narrow

exception to the requirement of complete diversity. As the Eleventh Circuit has made clear,

“[n]othing in our precedents concerning fraudulent joinder requires anything more than conclusory

allegations or a certain level of factual specificity.” Stillwell v. Allstate Ins. Co., 663 F.3d 1329,

1334 (11th Cir. 2011) (distinguishing fraudulent joinder standard from Rule 12(b)(6) plausibility

standard). “All that is required are allegations sufficient to establish ‘even a possibility that a state

court would find that the complaint states a cause of action against any one of the resident

defendants.’” Id. (quoting Coker, 709 F.2d at 1440–41); see Pacheco de Perez 139 F.3d at 1380–

81 (“In a fraudulent joinder inquiry, ‘federal courts are not to weigh the merits of a plaintiff's claim

beyond determining whether it is an arguable one under state law.’” (quoting Crowe, 113 F.3d at

1538)).

In this case, the Report adheres to these fraudulent joinder principles. The Report considers

the available record on removal, including the Amended Complaint and the competing

declarations. See Pacheco de Perez, 139 F.3d at 1380. The Report identifies specific and material

contradictions between Dr. Lenard’s declarations, on the one hand, and the declarations offered by

Scanlon and Wright—ultimately finding contested issues of fact not appropriate for resolution on

a motion to remand [ECF No. 27 pp. 14–15, 18]. And, although S&N takes issue with certain

inferences drawn in the Report as relate to Plaintiff’s strict liability and negligence claims—for

example, that the Florida Defendants were compensated for the sale of the Echelon stem or that

Wright’s presence in the operating room during Plaintiff’s surgery supports her role as part of the

product’s distributive chain [ECF No. 28 pp. 18–20]—the Court finds these inferences to be

reasonably drawn from the removal record and in accordance with the Eleventh Circuit’s

instruction to resolve all doubts about removal jurisdiction in favor of remand. See Univ. of S. Ala.

v. Am. Tobacco, 168 F.3d 405, 411 (11th Cir. 1999).

S&N has not met its heavy burden to establish by clear and convincing evidence that there

is no possibility that Plaintiff can state an arguable claim against the Florida Defendants. The

CASE NO. 22-81396-CIV-CANNON/Reinhart

presence of the Florida Defendants destroys diversity jurisdiction. 28 U.S.C. § 1332(a). Remand

is required.

CONCLUSION

Accordingly, it is ORDERED AND ADJUDGED as follows:

1. The Report and Recommendation [ECF No. 27] is ACCEPTED.

2. Plaintiff's Motion to Remand [ECF No. 22] is GRANTED.

3. The above-captioned matter is remanded to the Fifteenth Judicial Circuit in and for

Palm Beach County, Florida. The Court reaches no view on the ultimate merit of

any of Plaintiff's claims.

4. The Clerk of Court is directed to CLOSE this case. Any scheduled hearings are

CANCELED, any pending motions are DENIED AS MOOT, and all deadlines

are TERMINATED.

DONE AND ORDERED in Chambers at Fort Pierce, Florida this 3rd day of January 2023.

UNITED STATES DISTRICT JUDGE

ce: counsel of record